JK Cement (JKCE)’s 3QFY25 result was above our estimates, led by 1) higher other operating income (impact of INR20-30/t), and 2) a higher volume of white cement. EBITDA stood at INR4.9b (-21% YoY; +7% vs. estimate), and EBITDA/t was INR1,010 (-24% YoY) vs. our estimate of INR943/t. Profit came in at INR1.9b (-33% YoY) vs. estimated INR1.6b. Management expects volume growth of 7-8% in 4QFY25 and ~10% in FY26. In FY25, JKCE will realize cost savings of INR40-50/t and the rest of INR75/t will be realized over the next few quarters. The company announced the acquisition of Saifco Cements, which has a grinding capacity of 0.42mtpa in Srinagar, and the EBITDA/t of this plant is INR1,500/t.
OutlookWe raise our FY25E EPS by 5% and reduce our FY27E EPS by 7% by tweaking the interest and depreciation expenses. We value it at 16x Mar’27 EV/EBITDA (vs. 15x earlier) and reiterate our BUY rating on the stock.
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